Solar power system tax code

Are solar PV systems eligible for a tax credit?

Solar PV systems installed in 2020 and 2021 are eligible for a 26% tax credit. In August 2022, Congress passed an extension of the ITC, raising it to 30% for the installation of which was between 2022-2032. (Systems installed on or before December 31, 2019 were also eligible for a 30% tax credit.)

What is the federal solar tax credit?

What is the federal solar tax credit? • The federal residential solar energy credit is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar photovoltaic (PV) system.2 (Other types of renewable energy are also eligible for similar credits but are beyond the scope of this guidance.)

Are there income limits on the solar tax credit?

There are no income limits on the solar tax credit, so all individual taxpayers are eligible to claim the credit on qualifying solar energy equipment investments made to their homes within the United States.

Can I claim a solar tax credit?

When you purchase solar equipment for your home and have tax liability, you generally can claim a solar tax credit to lower your tax bill. The Residential Clean Energy Credit is non-refundable meaning that it can offset your income tax liability dollar-for-dollar, but any excess credit won’t be refunded.

Does a community solar system qualify for a tax credit?

It’s important to note that you must either own the system yourself or purchase an interest in an off-site community solar project in order to qualify for the tax credit. Alternative financing, like a lease arrangement, does not qualify. The cost of structural work to support such systems, such as a new roof, cannot be included.

Are solar panels tax deductible?

Under most circumstances, subsidies provided by your utility to you to install a solar PV system are excluded from income taxes through an exemption in federal law. When this is the case, the utility rebate for installing solar is subtracted from your system costs before you calculate your tax credit.